Insights On American Express’s Net Interest Income
Rise in total interest income
American Express (AXP) reported net interest income of $3.02 billion in 1H16 and $3.03 billion in 1H17. Its total interest income rose to $4.0 billion in 1H17 from $3.9 billion in 1H16, reflecting a marginal 3% rise. This rise was mainly due to higher interest income from bank deposits in 1H17.
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In 1H16, American Express garnered interest income of $64 million from bank deposits, compared with $142 million in 1H17. The company incurred total interest expenses of $861 million in 1H16 and $965 million in 1H17, reflecting a 12% rise. This increase was mainly due to its average long-term debt rising and higher interest rates.
Enterprise value-to-revenue multiple
American Express has a trailing-12-month enterprise value-to-revenue multiple of 5.7x. Other consumer financial companies’ (XLF) multiples are as follows:
In the next part of this series, we’ll look at American Express’s US consumer services division.